What is Help to Buy?
The Help to Buy scheme could help you to purchase your dream home. When you put down as little as a 5% deposit on a newly built home, you can get a government Help to Buy: Equity Loan - for up to 40% of the purchase price for homes in London and 20% throughout the country. The remainder of the cost is covered by a mortgage from lenders participating in the Help to Buy scheme. You won't be charged fees on the loan for the first five years of owning your home.
Alternatively Help to Buy: ISA which is another scheme lead by the government may also help you take the steps to buy your own home.
Help to Buy - How it works
Equity loans are available to first time buyers as well as some homeowners looking to move, as long as the following are met:
- The home you are looking to purchase must not cost more than £600,000
- You must buy this home to live in, and not as a buy to let property
- You must not own any other property at the time you buy your new home
Help to Buy: Equity Loan
- 5% deposit required
- 20% loan from Government
- You obtain a mortgage for the remaining 75%
- No fees charged on the 20% loan for the first five years of ownership
| Typical example | |
| Example home value | £400,000 |
| 5% Deposit* | £20,000 |
| 20% Equity loan | £80,000 |
| 75% Mortgage | £300,000 |
*Minus any Reservation fees, or other applicable fees paid between Reservation and Exchange.
London Help to Buy: Equity Loan
- 5% deposit required
- 40% loan from Government
- You obtain a mortgage for the remaining 55%
- No fees charged on the 40% loan for the first five years of ownership
| Typical example | |
| Example home value | £400,000 |
| 5% Deposit* | £20,000 |
| 40% Equity loan | £160,000 |
| 55% Mortgage | £220,000 |
*Minus any Reservation fees, or other applicable fees paid between Reservation and Exchange.
Participating Developments
Many of our developments are offering Help to Buy properties. We are committed to helping you get on the housing ladder.
View our participating developments on the link below and get in touch with the relevant Sales teams, who will be able to answer any further questions you may have and arrange for you to come and see the development.
Calculator
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT. CHECK THAT THESE MORTGAGES WILL MEET YOUR NEEDS IF YOU WANT TO MOVE OR SELL YOUR HOME OR YOU WANT YOUR FAMILY TO INHERIT IT. IF YOU ARE IN ANY DOUBT, SEEK INDEPENDENT FINANCIAL ADVICE.
The Berkeley Group plc, Berkeley House, 19 Portsmouth Road, Cobham, Surrey, KT11 1 JG. April 2013
Frequently asked questions
What is the Help to Buy scheme?
The Help to Buy scheme is designed to assist eligible buyers in purchasing new-build homes to live in. It was introduced in 2013 by the then Chancellor of the Exchequer George Osborne with the aim of promoting the construction of new homes to meet the anticipated Help to Buy demand.
How does the Help to Buy scheme work?
When you choose to take a Help to Buy loan to buy a new-build home, the government will lend you up to 20% of the price of the home as an equity loan. The remainder of the cost is made up with your 5% deposit and a 75% of a commercial mortgage, which you will need to take out yourself.
Am I eligible for the Help to Buy scheme?
Help to Buy equity loans are available to both existing homeowners who no longer own a home, and first time buyers. To qualify, the home you are looking to buy must be valued at less than £600,000. You cannot own any other property and the property must be your main residence. You will also not be able to sub-let you new home under the Help to Buy plan, nor will you be able to take part in a part-exchange deal on a previous property.
Is Help to Buy available for new-builds only?
The Help to Buy scheme is available for new-build homes only. In October 2013, the Help to Buy scheme initiated a mortgage-guarantee phase which included older properties - however this part of the scheme closed in December 2016 and is no longer available.
Is the scheme available across the UK?
The scheme is available in England only. The governments of Wales, Scotland and Northern Ireland also operate similar, independent schemes.
Do you have to pay back your Help to Buy loan?
You have to pay back your Help to Buy loan after 25 years, or earlier if you choose to sell your Help to Buy property. You can pay back the loan whenever you choose, incurring no penalties for early or late repayment.
How much of a deposit would I need?
You will need a minimum cash deposit of 5% of the value of your new home. You can pay more of a deposit if you wish.
How much interest would I pay on the scheme?
You will not have to pay interest on your Help to Buy equity loan for the first five years of owning the home, but you will have to pay a £1 monthly management fee.
After that initial period, you will need to pay interest of 1.75% of the initial price you paid for the house. From then on, the fees rise based on the Retail Prices Index, plus 1% a year.
I have a Help to Buy ISA. Will I have to pay back my ISA bonus for the Help to Buy loan?
You can pay for the deposit on a Help to Buy home with the funds in your Help to Buy ISA, including the money generated through tax-free interest. You will be able to use your ISA government bonus, but only once the contracts are exchange and the deposit paid.
There are three main benefits to the Help to Buy scheme, and they are:
- The first five years of the loan are interest-free, giving you the chance to save after paying the initial fees. After that, the interest rates are competitively set at 1.75%.
- The financial assistance of the Help to Buy loan means that you will have to borrow less, opening up far more competitive rates of interest on your standard mortgage.
- A smaller deposit of only 5% is required on your chosen home, allowing you to secure your new property sooner and for less.
What if I want to sell my Help to Buy home?
If you wish to sell a home bought on the Help to Buy scheme before you have paid back your equity loan, you will need to pay back the loan. The amount you repay for the loan is based on the market's valuation of your property at current rates, as opposed to the value of the home when you bought it.
Can I remortgage my Help to Buy home?
If you have bought a property with a Help to Buy loan and you are looking to remortgage, you can release the property's equity to repay the Help to Buy loan provided by the government. Many mortgage lenders, however, do not offer remortgaging opportunities and if they do, they often require the borrower to pay off the Help to Buy loan in full before any remortgaging can be done.
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